Trans Mountain Toll Settlement: What It Means for Import Freight Costs
CER approved Trans Mountain's toll framework, allowing 90% contracted capacity. The direct impact on customs work is zero, but the fuel cost ripple hits every import freight bill through drayage and LTL surcharges.
The Pipeline Toll You Don’t File On
The Canada Energy Regulator approved Trans Mountain’s toll settlement last week, raising contracted pipeline capacity from 80% to 90% and locking in a new rate framework for crude oil shippers. If you’re waiting for the customs angle, there isn’t one. Pipeline tolls don’t show up on a CAD. They don’t trigger CBSA examination. They won’t change your HS classification or your SIMA exposure.
But they do affect the fuel surcharge line on every drayage invoice, every LTL shipment, and every cross-border truck move you book. And that’s a landed cost question, which makes it a brokerage question.
How Pipeline Capacity Touches Import Freight
Trans Mountain moves Western Canadian crude to tidewater for export and domestic refining. The toll framework sets the cost structure for that movement. Higher tolls raise the cost of getting crude to refineries. Refinery economics affect diesel and gasoline output pricing. Diesel pricing feeds directly into the fuel surcharge formulas that carriers apply to drayage, LTL, and TL freight.
The connection is indirect, but it’s real. A Montreal importer filing CADs on containerized goods from Shanghai doesn’t care about Albertan crude oil tolls in the abstract. They care when the fuel surcharge on a $450 drayage move from the Port of Montreal to their Montreal sufferance warehouse ticks up because diesel at the pump climbed 8 cents.
Most fuel surcharges use a published index tied to Transport Canada or DOE weekly diesel averages, with a threshold and a sliding scale. The carrier’s tariff spells it out: diesel over $1.40/L triggers an additional 2% per $0.10 increment, or a flat cents-per-kilometre add-on, or a percentage of the line-haul rate. Read your drayage contract. The math is in there.
The 90% Capacity Clause
The settlement raises contracted capacity from 80% to 90%. That means shippers can lock in more firm commitments, which in theory smooths volume and reduces spot-market volatility for the remaining 10%. Whether that translates to stable diesel pricing is speculative. Refinery throughput, crude pricing, cross-border fuel arbitrage, and provincial fuel taxes all matter more than pipeline toll structures.
But contracted capacity does signal that Trans Mountain’s commercial customers want predictability. Import managers should want the same thing on the freight side. Fuel surcharges that swing 15% quarter-over-quarter make landed cost forecasting a guess. If your freight program is still quoting all-in rates with no fuel breakout, you’re flying blind when diesel moves.
Fuel Costs and CARM Statements
Freight costs don’t change the duty base. Canadian value for duty is the transaction value adjusted to the place the goods are shipped directly to Canada from, per Customs Act s.48. If you’re buying FOB Shanghai, the supplier’s invoice price is your starting point. Ocean freight, container drayage, and fuel surcharges are NOT dutiable. They’re part of your cash outlay and your total landed cost, but CBSA doesn’t assess duty or GST on them.
Import GST is 5% of value for duty plus customs duty plus excise duties and taxes, per Excise Tax Act s.215. Your drayage bill, no matter how high the fuel surcharge climbs, stays outside that calculation.
Where fuel costs DO hit your CARM Statement of Account: if you’re an NRI (non-resident importer) and your broker is advancing duties and fees on your behalf under an RPP bond, the broker’s fee structure often includes a pass-through for third-party freight charges. Those charges settle outside the CARM system, but they’re part of the commercial invoice reconciliation your accounting team runs every month. A surprise fuel surcharge spike in Q1 can blow your freight accrual if you’re budgeting on last year’s rates.
If your brokerage partner is filing CADs on a high-volume program with tight margin targets, ask them how they’re handling fuel surcharge volatility in their quoting. Some brokers build a fuel band into their all-in rate and true it up quarterly. Others pass it through line-by-line. Both are defensible. The wrong approach is assuming fuel is stable and finding out it isn’t when the invoice arrives.
Drayage, Detention, and the Montreal Fuel Picture
Port of Montreal drayage is a fixed distance for most consignees in the metro area, so the fuel surcharge is predictable in percentage terms even if diesel pricing isn’t. A 40-foot container from Racine Terminal to a Lachine warehouse is 15 kilometres. At $2.20 per kilometre base plus fuel surcharge, a 10% fuel swing is $3.30 on a $330 move. Not a budget-breaker on a single container, but multiply that across 200 TEUs a month and you’ve added $660 to your monthly freight spend.
The bigger fuel cost trap is detention. If your container sits at the terminal because your customs release is delayed, you’re paying storage. If your drayage carrier is waiting for a dock door because your warehouse is backed up, you’re paying detention. Detention rates often include a bundled fuel component, but some carriers charge it separately and index it to the same diesel formula. A two-hour drayage wait at $125/hour plus 8% fuel surcharge is $270. Do that twice a week and your monthly detention line is higher than your drayage base rate.
FENGYE LOGISTICS runs dock appointments on a 30-minute window specifically to kill detention exposure. Drayage arrives, drops, leaves. The driver isn’t sitting in the yard burning diesel and running the clock. That’s an operational decision that has nothing to do with pipeline tolls, but it’s the kind of thing that insulates you from fuel cost volatility better than hoping diesel stays cheap.
What Import Managers Should Actually Watch
Pipeline toll settlements are not a leading indicator for your freight budget. Diesel pricing is. Carrier fuel surcharge formulas are. And your freight contract’s fuel adjustment clause is.
If you’re running a predictable import program with consistent volumes, negotiate a fuel band with your carrier or broker. Lock in a fuel surcharge ceiling and floor for six months. If diesel climbs above the ceiling, you pay the capped rate. If it falls below the floor, the carrier eats the difference. Both sides get predictability. The cost is usually a slightly higher base rate to compensate the carrier for the risk, but the tradeoff is budget certainty.
If you’re quoting landed cost to your own customers on a forward basis, know what your freight and fuel exposure is before you commit. A $12,000 FOB container with $2,800 ocean freight, $450 drayage, and $340 in duties looks like a $15,590 landed cost. Add 6% fuel surcharge volatility and your floor-to-ceiling range is $15,507 to $15,673. If your margin can absorb that, fine. If it can’t, lock your fuel cost or pass the volatility through.
The Bottom Line
Trans Mountain’s toll settlement is pipeline policy, not trade policy. It won’t change how you file a CAD, how CBSA processes an RMD release, or what your RPP bond needs to cover. But fuel costs are part of total landed cost, and landed cost is what import managers actually manage. If your freight quoting assumes stable diesel, this is the quarter to revisit that assumption.
We track fuel surcharge swings across Port of Montreal drayage, cross-border LTL, and bonded trucking every month because our clients’ landed cost models depend on it. If your current freight partner isn’t breaking that line out or explaining how the formula works, get in touch.
Source: CSCB